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What are the standard clauses for a Real Estate Sales Contract?
Introduction
In Kenya, a Real Estate Sales Contract is a legally binding agreement between a buyer and a seller for the purchase and sale of real property. The contract outlines the terms and conditions under which the property will be sold. The standard clauses in such a contract are designed to protect the interests of both parties and ensure that the transaction is conducted in a fair and transparent manner. The key sources for these clauses include the Law of Contract Act (Cap 23), the Land Act (No. 6 of 2012), and the Land Registration Act (No. 3 of 2012).
Table of Contents
Parties to the Contract
Description of the Property
Purchase Price and Payment Terms
Deposit
Completion Date
Conditions Precedent
Warranties and Representations
Possession and Transfer of Title
Default and Remedies
Dispute Resolution
Governing Law
Miscellaneous Provisions
1. Parties to the Contract
Identification of Parties: The contract must clearly identify the buyer and the seller. This includes their full legal names, addresses, and identification numbers (e.g., National ID or Passport numbers).
Source: Law of Contract Act, Section 3.
2. Description of the Property
Property Details: A detailed description of the property being sold, including its physical address, plot number, and any other relevant identifiers.
Source: Land Registration Act, Section 14.
Title Information: Information about the title, including the title number and any encumbrances or liens on the property.
Source: Land Registration Act, Section 26.
3. Purchase Price and Payment Terms
Total Purchase Price: The total amount agreed upon for the sale of the property.
Source: Law of Contract Act, Section 3.
Payment Schedule: Details of how the purchase price will be paid, including any installments and the due dates for each payment.
Source: Law of Contract Act, Section 3.
4. Deposit
Deposit Amount: The amount of deposit to be paid by the buyer upon signing the contract.
Source: Law of Contract Act, Section 3.
Deposit Conditions: Conditions under which the deposit will be refunded or forfeited.
Source: Law of Contract Act, Section 3.
5. Completion Date
Completion Date: The date by which the sale must be completed, and the property transferred to the buyer.
Source: Law of Contract Act, Section 3.
6. Conditions Precedent
Conditions Precedent: Any conditions that must be met before the sale can be completed, such as obtaining financing or conducting a satisfactory property inspection.
Source: Law of Contract Act, Section 3.
7. Warranties and Representations
Seller's Warranties: Warranties made by the seller regarding the condition of the property, the title, and any other relevant matters.
Source: Law of Contract Act, Section 3.
Buyer's Warranties: Warranties made by the buyer regarding their ability to complete the purchase.
Source: Law of Contract Act, Section 3.
8. Possession and Transfer of Title
Possession Date: The date on which the buyer will take possession of the property.
Source: Land Act, Section 38.
Transfer of Title: The process and timing for transferring the title from the seller to the buyer.
Source: Land Registration Act, Section 37.
9. Default and Remedies
Default by Buyer: Provisions outlining the consequences if the buyer defaults on the contract, including forfeiture of the deposit.
Source: Law of Contract Act, Section 3.
Default by Seller: Provisions outlining the consequences if the seller defaults on the contract, including refund of the deposit and any other payments made.
Source: Law of Contract Act, Section 3.
10. Dispute Resolution
Arbitration Clause: A clause specifying that any disputes arising from the contract will be resolved through arbitration.
Source: Arbitration Act (Cap 49), Section 4.
Jurisdiction: The jurisdiction under which any legal disputes will be resolved.
Source: Law of Contract Act, Section 3.
11. Governing Law
Governing Law: A clause specifying that the contract will be governed by the laws of Kenya.
Source: Law of Contract Act, Section 3.
12. Miscellaneous Provisions
Entire Agreement: A clause stating that the contract constitutes the entire agreement between the parties and supersedes any prior agreements or understandings.
Source: Law of Contract Act, Section 3.
Amendments: A clause specifying that any amendments to the contract must be made in writing and signed by both parties.
Source: Law of Contract Act, Section 3.
Notices: Provisions for how notices will be given under the contract, including addresses for service of notices.
Source: Law of Contract Act, Section 3.
Conclusion
A Real Estate Sales Contract in Kenya must include several standard clauses to ensure that the transaction is conducted fairly and transparently. These clauses cover the identification of the parties, description of the property, purchase price and payment terms, deposit, completion date, conditions precedent, warranties and representations, possession and transfer of title, default and remedies, dispute resolution, governing law, and miscellaneous provisions. By including these clauses, both the buyer and the seller can protect their interests and ensure a smooth and legally compliant transaction.
Answered by mwakili.com